Housing Bubble

California's Housing Affordability Index falls

July 11, 2003

LOS ANGELES - The percentage of households in California able to afford a median-priced home stood at 27 percent in May, a 1 percent decrease compared to the same period a year ago when the Index was at 28 percent, according to a report released today by the California Association of REALTORS® (C.A.R.). The May Housing Affordability Index (HAI) was unchanged from April when it also stood at 27 points.

The minimum household income needed to purchase a median-priced home at $369,290 in California in May was $84,980, based on a typical 30-year, fixed-rate mortgage at 5.62 percent and assuming a 20 percent downpayment. The minimum household income needed to purchase a median-priced home was up from $81,510 in May 2002, when the median price of a home was $319,590 and the prevailing interest rate was 6.82 percent.

At 64 percent, the High Desert was the most affordable region in the state, followed by Sacramento at 42 percent. The Monterey and Northern Wine regions were the least affordable regions in the state at 17 percent.

C.A.R.’s monthly housing affordability index measures the percentage of households that can afford to purchase a median-priced home in California. C.A.R. also reports housing affordability indexes for regions and select counties within the state. The index is the most fundamental measure of housing well-being in the state.

  CALIFORNIA HOUSING AFFORDABILITY INDEX *
                                   May-03          Apr-03        May-02
  California                           27              27            28  r
  California - Condos                  41              41            41  r
  United States                        59              59            56
  C.A.R. REGION
  Central Valley                       38              39            41
  High Desert                          64              64            66
  Los Angeles                          28              29            31  r
  Monterey Region                      17              16            15
  Northern California                  32              31            34
  Northern Wine Country                17              17            17
  Orange County                        21              21            22
  Palm Sprgs/Lwr Desert                21              19            21
  Riverside/SBernardino                40              39            44
  Sacramento                           42             43r            44
  San Diego                            21              22            20
  San Francisco Bay Area               19              19            17
  San Luis Obispo                      18              17            21
  Santa Barbara County                 21              13            21  r
  Santa Clara                          26              26            20
  Ventura                              26             23r            32
  COUNTY
  Alameda                              20              20            18
  Contra Costa                         11              10             9
  Fresno                               44              44            50
  Kern                                 56              57            59
  Marin                                18              17            15
  Merced                               31              33            38
  Riverside                            35              33            39
  San Bernardino                       49              49            52
  San Francisco                        12              11            10
  San Joaquin                          33              32            31
  San Mateo                            17              18            16
  Santa Cruz                           17              16            15
  Sonoma                               17              18            18
  Stanislaus                           38              38            41

   * -- percentage of California households that can afford to purchase a
        median-priced home
   r - revised

Source: California Association of REALTORS®